The hiring manager agreed with the new employee that, when he works in FarAwayTown, we will pay him for the extra miles he travels, compared to when he works at HeadOffice. Which, after all, sounds reasonable to a layman, particularly as the employee was accustomed to doing just that when we previously engaged him on a self-employed basis.

- the employee spends less than 40% of his time in FarAwayTown, so this could be a temporary workplace.

- it could be argued that the task he performs is of limited duration – he acts as manager for 9 hours; anything he does not do is picked up by a different manager the next day; and he has no ongoing staff management responsibility.

I think these arguments are in line with paragraphs 3.10, 3.16, and 3.22 and example "Edward":

"Example Edward lives and works in Portsmouth where he is employed as an engineer. His employer sends him to work in Southampton for 11⁄2 days a week for 28 months. For the rest of the week he continues to work in Portsmouth which remains a permanent workplace. In considering whether Edward is entitled to tax relief for travel between home and Southampton it is important to look at the amount of time he expects to spend there each week and for how long he expects to be in Southampton. Because he expects to be in Southampton, for less than 40% of his working time, albeit over a period longer than 24 months, and he retains a permanent workplace in Portsmouth, Southampton is a temporary workplace for Edward and he is entitled to tax relief for the cost of getting there and back."

However, paragraph 3.43 " People with more than one workplace at the same time" is giving me problems. It says "Someone who has 2 or more employments or is in an employment which requires regular attendance at more than one workplace, may have more than one permanent workplace during the same period. Example John is a mortgage adviser employed by a chain of building societies. He works 5 days each week but spends each day in a different branch in a different town. He works in the same branch on the same day each week. John is not entitled to tax relief for his travel from home to any of the branches. That is because he travels regularly to each branch and his work is neither of limited duration nor for a temporary purpose. So each branch is a separate permanent workplace."

John's work is apparently not of limited duration, which make me doubt whether our manager's is too (and Edward, in the first example). Perhaps the difference is that John's work is not picked up by a different advisor the next day?

Finally, against the payment of expenses tax-free, is the following paragraph:

3.44 Most employees will not have more than one permanent workplace at the same time. Each case will depend on the particular facts. The sort of things that would point to a workplace being a second permanent workplace include:

• the employee regularly performs a significant part of their duties there (YES)

• people would expect to be able to contact the employee at the second location (YES)

• the employee has an office, or desk, and support services at the second workplace which he or she regularly uses (YES)

• the employee performs similar tasks at each workplace (YES, FOR THE 2 SHOPS; NO FOR HEAD OFFICE)

• the employee does not attend the workplace solely to do specific tasks such as attendance at a specially arranged meeting (see paragraph 3.13) (CORRECT)

So I am completely confused. I have tried our employment solictors, but they were clueless and said "refer to his contract" (which is silent on the subject) and were rather surprised that there might be any guidance from HMRC on the subject.

I am strongly discouraged from asking our external accountants anything at all, because they are extremely expensive (being London-based specialists)

So my gut feeling is we need to pay him mileage as this was agreed between him and his hiring manager – the question is whether or not the payment is tax-free.

Yes, I understand and agree. However they are very good at charging large amounts and telling us nothing, and the director has asked me to use them as little as possible, so I thought I'd try here first. We do have some very experienced people on here who can point out the one thing you missed that makes it all clear. But we do need to change accountants, in my opinion. I am qualified, but everyone needs help sometimes, and I can't get it, at least not at a price we can afford. (They are London specialists who are quick to rack up the costs)

The contract is not silent. It says, presumably, what you say:
"The company I work for has hired a new employee to work at 3 locations, as a shop manager"
If he is hired to work at these locations, then it is probable that none is a temporary workplace, as you correctly deduced from 3.43 onwards

Sorry I meant the contract is silent on the payment of expenses.... but I see what you mean, and I think you are right.
Re-reading HMRC 490 I can see that all the examples use the words "Edward is SENT....", "Fred is SENT...." indicating that the situation changed after the engagement commenced. And that is the key. Thank you. I will pay him as agreed between him and his hiring manager, but it will be taxable.

I may have misunderstood you but you seem to be saying that the work in Faraway is of limited duration because it is only 9 hours a week. That is not what is meant by limited duration. It means the period throughout which he works at Faraway for one day a week is limited. In other words, for some reason, he will only have to do it for a set period, say for example 2 years. From the way you have described it I believe he has 3 permanent workplaces so the payments are taxable.

Yes, I had been by some of the examples in 490, in which the length of time *was* indefinite, but the key difference was (in the examples) this was not the intention from the outset. I've got my head round it now and I agree, he has 3 permanent workplaces so the payments are taxable.

Whilst I agree with Tony when you have an employee that works from three places the employer is going to have to make sure that the employee does not loose out, otherwise he will feel slighted and may walk.

I would suggest that a taxable car allowance is probally a better option.

Absolutely Paul, and we are going to honour the agreement made between the employee and the hiring manager. I can look into the taxable car option although (wearing 2 hats and rushed off my feet - typical small business) I may just take the easy route and explain that his mileage payments will be taxed!